BJ's Exec Resigns After Q3

NATICK, MA-Four years after being named president and CEO of BJ’s Wholesale Club, Michael Wedge has handed in his resignation, saying the company’s leadership team “will benefit from a new perspective.” Board Chairman Herb Zarkin will serve as interim chief executive officer while company officials conduct a search for Wedge’s successor.

Wedge’s resignation fueled speculation that the locally based company could be ripe for a takeover. But a BJ’s spokeswoman said the 171-store chain was not for sale.

“While the company has made great strides in its efforts to improve general merchandise sales and customer traffic, overall progress has not come as quickly as we had hoped and expected. We agree that the company’s leadership team will benefit from a fresh perspective at this time,” Wedge and Zarkin said in a joint statement announcing the resignation.

Wall Street analysts said Wedge’s resignation at the start of the holiday sales season was a result of a disappointing third quarter in which profits fell 34%. Wedge, 53, who served as executive vice president of club operations prior to being named president and CEO in September, 2002, will remain on as a board member.

News of Wedge’s resignation comes less than two weeks after the nation’s third largest retail warehouse club announced that net income dropped nearly $19 million to $18.3 million, or 28 cents per share. This compares to a net income of $27.8 million, or 41 cents per share for the third quarter of 2005.

Results for the period ended Oct. 28, 2006 included $2.7 million post tax income for stock-based compensation expenses, compared with about $200,000 for the same period a year ago. In the third quarter of 2005, the company also had $1.9 million in post tax income that included a credit card class action litigation settlement and expenses for uninsured losses relating to hurricane Wilma.

Net sales for the quarter were up slightly at 2.9% to about $2 billion, while comparable club store sales increased just 0.1%. For the first nine months of 2006, total sales were up 4.9% and comparable club sales increased 1.3%.